The disordered and rampant local tax incentives have interfered with regular business competition and resource allocation, and whether they have the rationality of existence has also become an urgent problem to be clarified. In China, the government has undertaken a new round of policy adjustment to comprehensively sort out and standardize tax incentives, trying to realign value-oriented tax competition among local governments. Thus, this paper examines the real effect of standardizing tax incentives using China's State Council documents Nos. 62[2014] and No. 25[2015], with the measurement of abnormal tax burdens and abnormal fiscal subsidies. The result shows that this round of policy governance has maintained the steadiness of the overall tax burden and fiscal subsidy, and only abnormal tax burdens and fiscal subsidies have been reduced through structural adjustment; In addition, it has also taken into account the difference among regional economic development. The governance in the Midwest is generally lighter than in the East. Meanwhile, the effect of governance among different property companies has presented a reduced tendency as "state-owned enterprises -- local state-owned enterprises -- private enterprises".

We examine how improving the efficiency of a country’s tax system via the implementation of the information system affects firms’ behavior, utilizing the implementation of the Golden Tax Project III in China as a natural experiment. The Golden Tax Project III strengthens tax enforcement, while standardizes the application procedures for tax incentives. Based on a large-scale corporate tax survey data, we show that large firms enjoy better access to debt finance and increase take-up of tax benefits since the reform, while keeping their tax burden unchanged. The reform leads large firms to increase investment. On the contrary, the reform increases tax burden for small firms, which offsets the positive effect due to better access to debt finance. The reform has limited impact on small firms’ investment or take-up rate of tax incentives. Our study contributes to the debate on how adopting more efficient information system affects tax administration and firms’ real performances.